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MAX FOSTER, HOST: The blind leading the unseeing. US senator Carl Levin tells me HSBC's failure is exposed to regulators.

(BEGIN VIDEO CLIP)

SEN. CARL LEVIN (D), MICHIGAN: There's a major failure in terms of oversight. Our regulatory body fell down on the job.

(END VIDEO CLIP)

FOSTER: The cliff draws closer. Ben Bernanke takes his warning to the House.

And an Olympic win for jobs as UK unemployment pits expectations.

I'm Max Foster, this is QUEST MEANS BUSINESS.

Hello to you. Also tonight, we're offshore in Singapore, or at least Richard is.

RICHARD QUEST, HOST: Indeed I am, Max. This evening I will update you on how they view the libor scandal in Singapore and what the authorities here are saying and give you a view -- a different view of Singapore, where manufacturing is all the rage. That's later.

FOSTER: Now, stop the rot or pay the price. International banks could lose their charters in the United States if their affiliates break the law. That's the warning from the chairman of the Senate committee investigating HSBC, and that inquiry has already shown the bank's failure to stop money-laundering by drug dealers and terrorist groups.

Earlier, I spoke to Senator Levin and asked him if this was as much about regulation as it was about mismanagement at the banks.

(BEGIN VIDEOTAPE)

LEVIN: Well, there's a major failure in terms of oversight. Our regulatory body fell down on the job. The real problem, of course, comes from the people who are violating our laws and regulations, who are aiding and abetting terrorism or drug dealing.

But there's a big responsibility, also, on the part of the regulatory agency, which had all kinds of notice and gave all kinds of warnings through a decade to the HSBC. HSBC would say they would shape up, and then they didn't. And they should have been subject to much stronger action at the time.

There's also been a failure of accountability. We can't just get apologies and promises of change. There's got to be enforcement to make sure those promises are kept. But the most powerful message can be delivered if there is accountability on folks who are leading an institution which so fell down on this job.

FOSTER: It's interesting, isn't it? The regulation does seem to be there. We know that these things were illegal, but there was something going on with the culture, perhaps, of the bank, and also the culture of the regulators that this just wasn't spotted. So, how do you fix it? How do you stop it happening again?

LEVIN: Well, in two ways. One is, there's got to be accountability for those who misled. Those who hid the source of funds inside the HSBC, for instance, their affiliate that deleted that money was coming from Iran, thousands of transactions coming from Iran.

That was not allowed, if it was done in a certain way or at least it was not allowed by our rules and regulations and sanctions against Iran.

You need accountability, that's been missing. You also need much stronger oversight. That was missing. And in both cases, we're hoping for both.

We're hoping there will be accountability on the bank, but we're also believing now that with new leadership at our regulatory agency that we're going to see much stronger oversight, that we're going to see cease and desist orders, not just notices, but cease and desist orders.

And if necessary, if an affiliate of an international bank, a global bank, continues to ignore the rules of our government or any government, that the charter of that bank, that affiliate in the United States, for instance, should not continue.

FOSTER: What's the likelihood that you'll have other banks appearing before you in future on similar charges?

LEVIN: Of course, we had a bank a year ago, we had Goldman Sachs. It wasn't a similar charge, it was a different charge, a charge of conflict of interest in shafting their own clients with selling them the stuff that was junk and they knew it was junk and then betting against their own clients and so forth.

So, we've had a number of hearings involving banks for different kinds of problems. But what now we're going to do is focus on making sure that this bank carries out the commitments that they've made to change their culture,.

And we're going to carry out and continue to put some focus on our regulator to make sure that its new leadership carries out its commitment at the OCC to have some real tough enforcement.

(END VIDEOTAPE)

FOSTER: Now, new supervision for eurozone banks should be Europe's first priority, according to the International Monetary Fund. The IMF says the euro crisis has entered a new and critical stage, and eurozone countries still lack the tools to fix it. Today's report from the fund says a tighter banking union will be crucial in fixing the crisis.

Meanwhile, in the United States, Tim Geithner says the squabbling in Congress is hurting the US economy. The Treasury Secretary said the main thing coming out of Washington right now is despair.

And Ben Bernanke says Congress needs a longer-term vision to tackle the so-called "fiscal cliff." The Federal Reserve chairman says upcoming tax rises and spending cuts could wipe out 5 percent of GDP, which could push the US into recession. Maggie Lake has been watching Ben Bernanke's second day on Capitol Hill. Maggie?

MAGGIE LAKE, CNN INTERNATIONAL CORRESPONDENT: Yes, Max, very interesting commentary coming from both those gentlemen today. There was a lot of concern -- remains a lot of concern about Europe. Frustration, frankly, about the inability of European leaders to find a solution.

But the bulk of the conversation, they chose to focus on or ask about the problem that is within the ability of the US to actually solve, to do something about, not just be a bystander. And that is, of course, finding a solution to our own budget deficit problems, some sort of compromise.

The Democrats and Republicans remain bitterly divided about that, and Ben Bernanke used his pulpit once again to try to urge them to find a solution and to warn about what would happen if they failed to do so. Have a listen.

(BEGIN VIDEO CLIP)

BEN BERNANKE, CHAIRMAN, US FEDERAL RESERVE: If that all happens, that will no doubt do serious damage to the recovery and probably would cost a significant number of jobs. That's -- it's not essential to do it that way. I think the best way to address this is to attack the long-run fiscal sustainability issue seriously and credibly, but to do it in a more gradual way.

(END VIDEO CLIP)

LAKE: He does not want them to sort of trigger all these deep cuts that will go into effect in January. Tim Geithner also addressing that, saying that we have the ability to solve this problem. We need to do it if we're going to maintain our credibility here in the US.

And Max, he really held up Europe as a warning of what would happen, saying at one point, Europe is burning because of its lack of credibility. So, some pretty strong language today.

FOSTER: Yes, libor still ongoing, of course, as a big story here in Europe, but Tim Geithner actually looking quite defensive on the issue today.

LAKE: He was. It's a big story here, as well. In fact, both gentlemen asked about it throughout the day. Tim Geithner was asked, "Why didn't you do more back in 08? Why didn't you talk about it more? Why didn't you raise the alarm bells?"

And Geithner's saying, very defensive, saying that they took very strong action. They did what they needed to do, and that basically now they are actively involved in trying to find the right reform.

(BEGIN VIDEO CLIP)

TIMOTHY GEITHNER, US TREASURY SECRETARY: And we have now taken the initiative to set up a broader effort involving all the countries that matter around the world, have a big stake in this, to try to make sure we push, and actually what happens now is reforms that actually fix the underlying problem.

So, we -- the British, obviously, have to be central to that, but we're not going to leave it completely to the British because, obviously, the world has a stake in fixing this now.

So, we did the right and the necessary thing, and we did it early. We were very forceful from the beginning, and you've seen, now, a very forceful enforcement response. More to come on that.

LAKE: Not going to leave it to the British. Everyone's getting involved now. I don't know about you, Max, but it sounds like a rebuke to me.

Well, the Fed's Beige Book is out, and whilst it's a mediocre picture, we're still in the black on Wall Street. The main market currently -- if we can show you that -- up very slightly, three quarters of one percent to 12,895. Now, the Fed's regular report says that jobs growth is tepid in most districts, with manufacturing also growing slowly. Overall, most districts say growth is modest to moderate.

Meanwhile, it was a strong day here in Europe. Each of the big four closed with gains of 1 percent or higher. One of the most popular places to put your money right now is German bonds, and the yield on two-year German paper went negative at an auction today, would you believe? That means you pay for the privilege of lending your money to Germany. It's all about safe havens.

We'll be in Singapore with Richard in just a moment. He'll be taking a tour of one company with its foot firmly on the gas.

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(BEGIN VIDEOTAPE)

QUEST (voice-over): Singapore built its economy on exports and foreign investment. Now, as the economy's matured, this city-state in Southeast Asia have had to rethink and work hard to diversify.

It wants to encourage the growth of new industry, those like biotechnology, tourism, high-tech, value-added.

And now, the efforts of government with industry, a part of a proactive policy that defines the place.

TAI HUI, STANDARD CHARTERED: The forward thinking is critical. If you look at the ways government drives policy, you'd be thinking a lot of the Singaporean, how they talk about their own personal career or their lives. There's a certain survivor mentality.

(END VIDEOTAPE)

FOSTER: Now, as regulators in the UK and US focus on libor, Singapore is looking into its own interest rate benchmark, which is sibor. Singapore's monetary authority says it must investigate even though the rate only applies to a relatively small market. Richard is there all week for us. He joins us now live. Richard?

QUEST: Yes, indeed, Max. Last night, you'll remember that I told you we heard from the CEO of DBS Bank, who said that he didn't believe there was a libor-type scandal nestling in the Singaporean banking authorities.

Now, the MAS, the Monetary Authority of Singapore, has put out a statement pretty much following on from what you heard from Maggie Lake in New York, saying that they, too, are now looking into to see if there is anything there. But the experts there don't believe that there is anything to be discovered.

But as you've been talking this evening, they're not going to leave it up to the British. And so, Singapore, too, is now joining in everyone else looking at their sibor, as it's called, system to see what changers there might need to be made here.

Banking and finance is such an important part of Singaporean economy. It's about 20, 22 percent, perhaps just a bit more. But what I've been discovering over the past 24 hours is that actually, when it comes to the economy here, there's a great deal more than money.

(BEGIN VIDEOTAPE)

QUEST (voice-over): The glass skyscrapers of the banks and the whoops of holiday-makers having fun. This is how much of the world sees Singapore. Drive to the west of the city-state, and you see a very different view, the real economy: manufacturing.

A third of the country's GDP comes from making things. And sometimes, with companies like Keppel, very large and expensive things, like oil rigs. From the dry docks, where Keppel builds six a time, to the floating giants being kitted out, next year, Keppel hopes to build and deliver 30 rigs.

TONG CHONG HEONG, CEO, KEPPEL OFFSHARE AND MARINE: We were known as a sunset industry, but we went all the way out to prove the soothsayers wrong.

QUEST: They did it with investment and backing of a government that knows what floats the economy. Billions of dollars in oil rigs.

Don't be fooled this is not old-fashioned metal-bashing. It's advanced engineering and mechanics, using 3D imaging and advanced computer technology.

QUEST (on camera): How high-tech is all of this?

WONG KOK SENG, MANAGING DIRECTOR, KEPPEL FELS: Well, if the rig has to operate in the high seas with harsh environment and has to be like a factory to be able to drill precisely 30,000 feet below water, how high- tech do you think it is?

QUEST (voice-over): This is a country criticized for being conservative. Here, government and industry work together in an old- fashioned way, but promoting new thinking.

SENG: Don't give me ten reasons why it can't be done, give me one reason why we can do it. And it is from that impetus, it is from that push, we think out of the box to come out with ways to do it. Innovation is really key to today's business.

QUEST (on camera): If banking and tourism is the sexy part of Singapore's economy, the reality is heavy manufacturing is the backbone, building large oil rigs worth hundreds of millions of dollars in exports.

QUEST (voice-over): From oil rigs to jet engines, this year Rolls- Royce opened its new Selatar plant, its first assembly factory outside the UK, where they make the Trent engines. The project was built in close cooperation with the Singaporean government.

JONATHAN ASHERSON, REGIONAL DIRECTOR, ROLLS-ROYCE: Asia is extremely important to Rolls-Royce. We have an order book of 62 billion pounds, half of which is from Asia or the Middle East, and it's the fastest-growing region for us, as well.

QUEST (on camera): With its high cost of living, Singapore will never be a place to make labor-intensive consumer goods. Instead, they focus on value-added specialist products. This enables them to balance out the economy and, as Asia grows, get their slice of the cake.

(END VIDEOTAPE)

QUEST: And that is indeed the way this economy and this country has been developing. The ability to adapt, despite what the critics say, and to take advantage of the opportunities as they arise.

Tomorrow night on QUEST MEANS BUSINESS, from Singapore, we'll meet the finance minister and deputy prime minister, and we'll be finding out not only about weathering the storm, but as he's also head of the powerful IMF committee, the IMF views what's happening in the global economy. That's Singapore's finance minister tonight -- tomorrow night, only on QUEST MEANS BUSINESS. Max?

FOSTER: Richard, thank you very much, indeed. And a Singaporean Currency Conundrum for you, now. In 2010, Singapore minted this coin, the first rectangular coin in the country.

But what was it four? A, to recognize Sir Stamford Raffles, the founder of modern Singapore? B, to commemorate 45 years of independence? Or C, to celebrate 50 years of the Singapore dollar. Answer's later.

The dollar is rising against the euro, but falling against the yen. It's lost around a third of a percent against the Japanese currency today after the US Fed Reserve chairman faced Congress for a second day.

(COMMERCIAL BREAK)

FOSTER: London's Olympic Games organizers are in damage control mode. Still reeling from yesterday's security shambles, they've now been forced to shorten the Opening Ceremony, we're told. Organizer Danny Boyle says he is tightening up the spectacle because of fears it would overrun its appointed finishing time of between midnight and 12:30 AM and the spectators stranded.

Organizers also announced today that they've had to withdraw half a million Olympic football tickets and scale down venues because of sluggish sales. But the Olympics are providing a boost to the jobs, at least. The jobless rate has fallen for four months in a row, now. It now stands at just over 8 percent. Jim Boulden takes a look at how the Olympics are helping London's young people win jobs.

(BEGIN VIDEOTAPE)

JIM BOULDEN, CNN INTERNATIONAL CORRESPONDENT (voice-over): The economic crisis has taken its toll on Britain's youth. One million plus are now unemployed. That's more than 22 percent of those aged 16 to 24. It might be worse in London, if it were not of the upcoming Summer Olympics.

Some of the Olympic money has gone to helping London's disadvantaged youth get job training.

BOULDEN: British Olympic gold medalist Kelly Holmes is also using her success to get London kids to see the benefits. Her charity uses athletes to inspire young people.

JULIE WHELAN, DAME KELLY HOLMES LEGACY TRUST: What we find when we work with the young people through our Get on Track program is they're seeing the whole of the East London landscape changing, and that's really integrational for them. And new opportunities developing.

BOULDEN: But by the autumn, the Olympics will be over, and many of the temporary jobs will go.

BOULDEN (on camera): So, no worries, then, that the legacy will sort of peter away after the Olympics?

WHELAN: Well, I think none of us should think that anything's going to be simple. We have a real responsibility to make sure that the legacy is a real legacy and lives and breathes beyond.

BOULDEN (voice-over): And much of the youth training has nothing to do with the Games. Some of those in the Holmes project get training in London's top firms. Recruitment agency Morgan Hunt is one.

JAMES STEPHENSON, MORGAN HUNT: These kids aren't aware the skills they have, and so they'll come to us or they'll come to Lex Trust (ph) with some skills but no real understanding of how it correlates to the business world. So, these guys will come and do workshops with us on CVs or interviewing skills.

BOULDEN: Twenty-six-year-old Carl Clarke from Hackney, East London himself once unemployed, now works with London youth to get kids 16 to 18 into the right frame of mind to find work.

CARL CLARKE, LONDON YOUTH: You can apply for 100 jobs and only 3 of them will even reply to you. So, sometimes there's a setback where you just don't want to look anymore because you feel like nobody's even giving you a chance.

BOULDEN: Problem is, London is one of the world's most expensive cities.

CLARKE: A lot of young people are saying there's no point in me taking this particular job because I won't be able to live. I will just barely be able to get to work, let alone buy lunch.

BOULDEN: Of course, in this time of austerity, more help is needed when there is less money to go around.

ROSIE FERGUSON, CEO, LONDON YOUTH: There certainly have been cuts, and particularly for small, grassroots youth organizations. There's a real challenge that a lot of them will have cut back on a lot of the work that does do that development of young people's all-around character.

The specific targeted work on employability, there is investment in that, and the key is getting out to go to the right young people in the right places.

BOULDEN: London's unemployed youth don't always have a good reputation. Youth workers say many want to work, but the buzz around the Olympics won't last, and youth unemployment is already near record highs.

Jim Boulden, CNN, London.

(END VIDEOTAPE)

FOSTER: Now, it is important to look the part at work, and for athletes, the right kit can even help performance. The English Premier League side Tottenham Hotspur will be sporting new shirts when they run out against Stevenage in about half an hour.

And for the first time, the team is being sponsored by an American outfitter Under Armour. Richard spoke with the firm's founder and chief executive, Kevin Plank, and asked him why he decided to throw all his eggs in one basket and sponsor just one team.

(BEGIN VIDEOTAPE)

KEVIN PLANK, CEO AND FOUNDER, UNDER ARMOUR: It's been 17 years in the making since the founding of the company. It's time for us to truly take our message on the global stage. And so, we've done that, and we're currently doing business in 60 countries around the globe.

But this is something I think which is a real exclamation point, a flag in the ground, literally, with the Spurs' logo on it that says Under Armour is serious about the sport of football, and we're serious about becoming a global brand.

QUEST: Why do you believe association with one team with all the risks that go with that, why do you believe it's worth to spend so much money?

PLANK: I think that the entrance into the global sport of football, of what that means, it is the world's sport, there's no question about it. And so, we've been successful in America. And so, today, 90 -- roughly 90 percent of our revenues are still based in the US.

But all that know-how and that logic of that nearly $2 billion of turnover is something that's put us in the position to be subject matter experts at building the best kit in the world. And so, bringing that now to the sport of football --

And we've outfitted teams in the Bundesliga. We've been in football before, but English Premiership, of course, as we believe, is tops. And again, a club like Tottenham, a London club like Tottenham is -- could be no better partner for us.

QUEST: OK. Your research must show that it does pay to be -- to outfit an individual team. Say, for example, naming a stadium or something similar to that.

PLANK: Yes. We have a theory that says if a bank could do the deal, we shouldn't do it. So, we wouldn't -- we'd be the kit supplier where we are actually making and putting the product on field that's authentic and that's credible and giving athletes and edge or an advantage. But just naming the facility wouldn't exactly be something that would fit our DNA.

QUEST: When you look at the others, the Adidas, the Nike, the -- all the other big -- don't have a wry smile as I say that. How can a relatively small company take on those behemoths with such vast budgets?

PLANK: So, look at the largest of those companies, and so just call it three or four years ago, Under Armour in our growth took until -- from 1996 until 2010 to cross the billion-dollar revenue mark.

Five years for our first $5 million, the five for our first $300 million US, the next five to crossing $1 billion. We'll come close -- our latest outlook has us nearly doubling that number just two years later at $1.8 billion-plus.

And so, where these companies were 30 or 40 times our size just a few years ago, this year they're only 5, 10 times our size. And so, if you're going to bet on trends, I'd bet on the trend that we're coming and we're not going to slow down for anybody.

QUEST: OK. But it's still a daunting task.

PLANK: Yes, it's huge. If I was -- I have this statement, I was always smart enough to be naive enough to not know what we could not accomplish. Smart enough to be naive enough to not know what we could not accomplish.

If I knew these other companies with all these resources were that size when we started, I probably would have said you're crazy, we can never do it.

But one by one, one day at a time, one day being a little better than the one before it, one year being much better than the one before it, we've gotten progress, and so we feel very good about where we are and, more importantly, we feel very good about our positioning and what the future holds.

(END VIDEOTAPE)

FOSTER: Now, a generation gap for Ericsson. Its CEO tells us why the rollout of 4G networks is hitting profits. That's next for you.

(COMMERCIAL BREAK)

FOSTER: Welcome back, I'm Max Foster. These are the news headlines. Syrian media are reporting that at least four members of the government have been killed in an attack on the Assad regime. Arwa Damon is following developments for us in Beirut, and she joins us with the very latest now. Arwa?

ARWA DAMON, CNN CORRESPONDENT: Max, that attack said to have taken place during an emergency crisis meeting at the national security headquarters.

Amongst the dead, according to Syrian state television, the ministers of defense, interior, a security adviser to the president and a deputy minister of defense, Asef Shawkat, perhaps not the senior most casualty, but perhaps the most significant. Shawkat was not only the president's brother-in-law, but a very, very close friend and adviser, a member of that elite inner circle.

And this most certainly is going to be sending the Assad regime a clear signal that it is not immune and that it is perhaps not as in control as it would like. Now the Syrian government, according to state television, blaming this on a terrorist who detonated a suicide vest. Some conflicting information emerging from the opposition.

One member of the Free Syrian Army, though, saying that they were responsible for the attack, that it was a result of some pretty close collaboration between a number of brigades based in Damascus and the rest of the country, where they managed to smuggle explosives into the location where this meeting was taking place and detonating them by remote. If that is, in fact, true, it would mean that they would have had some sort of inside help. Someone who was --

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FOSTER: Thank you to Arwa. We lost her at the end, but we got most of the information. We'll be back with her throughout the coming hours, of course.

Now tonight on "AMANPOUR," Christiane is live in Jerusalem, speaking with key voices in the region, (inaudible) a Syrian colonel who recently defected and Dutch reporter Sander van Hoorn, who is in Damascus. That's "AMANPOUR" tonight, 8:00 pm in London, 9:00 in Berlin, here on CNN.

Some other stories following for you this hour. Bulgarian officials say six people have been killed in a bus explosion outside an airport on the Black Sea coast. It was carrying tourists who had just arrived from Tel Aviv. Israel's prime minister says it was clearly a terrorist attack, but all signs pointing to Iran.

Twenty-four NATO supply trucks have been destroyed in a pre-dawn bomb attack. It happened before dawn in northern Afghanistan. Officials tell us that trucks were sitting in a parking lot, loaded with fuel and supplies, when an explosive device attached to one of them went off. The Taliban claims responsibility by email.

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FOSTER: Ericsson's Q2 net profits have tumbled by nearly two-thirds, missing analyst expectations by a long shot, you could say. The mobile network equipment maker made around $170 million in the quarter, compared to $460 million for the same period last year. CEO Hans Vestberg told me that the slow switch in 3G networks, known as CDMA, to 4G, known as LTE, is one of the factors hitting sales.

(BEGIN VIDEO CLIP)

HANS VESTBERG, CEO, ERICSSON: If you looked into our network division, we were down 17 percent in the same -- second quarter. There are a couple of reasons. One is that CDMA equipment that we predominantly sell to the North American market is declining. As expected, rapidly, as we are transforming to LTE in the North American market.

Now there is that we have a couple of markets that was a little bit weaker. Russia 3D year-over-year was softer, so we didn't have much Russian 3D this quarter. Then we also had 2G same-sales (ph) in China that was slower than compared to last year.

Then we need to remember last year we were growing 20 percent in networks in the first half. So we are comparing with a tough quarter as well. But that's why we're down in network division.

FOSTER: So is this a good example of how the global economy actually is getting in a worse state rather than a better state?

VESTBERG: We actually had growth in the North American market, but we had a decline on CDMA equipment. But overall, we grew 5 percent year-over- year in North American market, which is -- are by far largest (ph) region.

However, Europe has been sort of a little bit more cautious. They especially in the markets where the macroeconomics uncertainties are higher. We're operated or in a sort of a wait-and-see mode. But they're not stopping projects because the underlying demand or the usage of mobile broadband, more smartphone, that is continuing.

So yes, we see a little bit of Europe due to the macroeconomics, but nothing new compared to previous quarters.

FOSTER: If the carriers are going to keep up with demand as they predict in future, they're not actually investing, are they, in the capital? They're not investing in your networks enough to keep up with future demands right now, because they're holding back, they're so concerned about the economy.

VESTBERG: There are relevant (inaudible) year yet nor on the beginning of the year. But if you look at the last year, when account investment in (inaudible) that was clearly an increase on mobile infrastructure worldwide when it comes to investment. So operators are investing in 3D network and 4D networks.

But the innovation, from the consumer point of view, new type of devices and new application is going extremely fast. Where we closed last year, it not more than 10 percent on the mobile subscribers in the world had a smartphone.

So of course, when you add that in the speed that they're doing, that is putting pressure on it. But up to last year, investment in mobile infrastructure was happening and growing.

(END VIDEO CLIP)

FOSTER: Well, meanwhile, Bank of America has beaten expectations with its quarterly earnings, but traders on Wall Street aren't impressed. Alison Kosik joins us from the New York Stock Exchange.

Tricky one for Bank of America.

ALISON KOSIK, CNN BUSINESS CORRESPONDENT: Yes, it is. So let me start with the good part of the report, Max. Bank of America earned $2.5 billion in the second quarter, or 19 cents per share. That came in better than Wall Street was expecting. Lending at B of A rose for a sixth straight quarter. Mortgage rates are at record lows here in the U.S. It has a lot more people taking out loans.

Still, we are watching shares of Bank of America fall more than 31/2 percent right now, because the company fell short on revenue and it also said it plans to cut costs in the billions of dollars at its commercial lending, investment banking and wealth management areas.

It's all because of the sluggish U.S. economy. Now after the bell today, we're going to get results from fellow Dow members IBM and American Express. There is some uncertainty over whether IBM will beat or miss its hardware and financing sector saw a decline.

But revenue from software and services increased. Meantime, the American Express is expected to report a slight distant earnings for the quarter. Now American Express earnings usually give a good indication of how affluent consumers are doing. The strong dollar could wind up hurting AmEx's result. The company's earnings in other countries will fall in value when they're converted to the dollar, Max.

FOSTER: Alison, thank you very much indeed. Now next, (inaudible) booming economy and its business travelers. We'll look at the hotel chains cashing in on China's growth.

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FOSTER: Now China's housing slump may have turned a corner. State figures show house prices were flat in June after eight months of declines. China's population is getting richer and more mobile and the country's now the number one source of Asia's outbound travelers.

Lizzie O'Leary spoke to Ritz-Carlton's head of sales and marketing, Chris Gabaldon, and he says his company's catering for a booming Chinese market, both inside and outside the country.

(BEGIN VIDEO CLIP)

CHRIS GABALDON, CHIEF SALES AND MARKETING OFFICER, RITZ-CARLTON: Think about the Chinese economy. It's rapidly growing and it's going to be the second largest economy in the world. It is the second largest economy in the world today and will surpass the U.S. economy by probably 2020.

So the Chinese traveler themselves is going to be a huge participant in the global economy.

LIZZIE O'LEARY, CNN CORRESPONDENT: Who is that traveler? Are you trying to appeal to domestic Chinese travelers or international travelers coming into the country?

GABALDON: So the business that we're developing within China, a large portion of it is Chinese travelers staying in Chinese hotels, customers traveling from Beijing to Shanghai to Hong Kong.

The outbound prospects for China are incredible and, in fact, governments around the world are recognizing the importance of reducing the restrictions, lowering the amount of time that it takes to wait for visas, and recognizing the importance that the Chinese traveler's going to have as they really sort of unleash themselves on the global economy.

O'LEARY: You all are a high-end chain. It is an expensive proposition for someone to be traveling outside of China. How you get them to stay at your hotels as opposed to someone else's?

GABALDON: We actually don't think it's an expensive proposition. We think it's pretty good value for them. These travelers are -- you know, it's interesting about the Chinese travelers, that they are incredibly sophisticated. Many of them are very well versed in luxury goods and items.

The Ritz-Carlton brand resonates with them. It's a brand that has a story. It is authentic and it's something that they recognize that is really true to luxury. So as they leave China and they travel around the world, it's a brand that they recognize. It's sort of a beacon for them. They understand the level of service and experience that they're going to get.

O'LEARY: Where are they going?

GABALDON: They're going all over the world. Chinese travelers for us, probably about half of them, are staying within China. The number one place that they want to go is the United States. The second place they want to visit is Europe.

O'LEARY: When you look at the Chinese economy, obviously it's been a tremendous growth story. But we have started to see some weakness and some slowing. Does that change the way you invest in China? Does it change the pace of building a property within the country?

GABALDON: You know, it may change the pace in the short term of how projects are developed and built. In the long term, I don't think it has any bearing on what we think will be happening with China over the next 10- 15 years.

The Chinese government is wisely investing in tremendous infrastructure. So whether we slow down over the next year or so, that may be the case. But the long-term prospects are incredibly powerful for China.

O'LEARY: Anything that worries you about doing business in the Chinese market? What's challenging there?

GABALDON: It's a new and emerging market for everyone, right? And there still is a large amount of governmental control. The Chinese government seems to be doing a very good job of managing the economy. It is sustainable growth over a long period of time.

As long as they have stability in the marketplace and continue to invest in China, and into the people and into the resources and the infrastructure, we think the long-term prospects are very good.

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FOSTER: Well, some of China's businesses are expanding at breakneck speed to keep up with the country's rapid growth. And Hanting Inns is opening a hotel every two days, would you believe. And its founder wants it to be the world's biggest hotel chain by 2020. In Beijing, Richard looked at what guests can expect to get for as little as $15 a night.

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RICHARD QUEST, CNN HOST (voice-over): With 200 hotels planned for this year alone, the running total is 1,000. And the first one was only opened by the billionaire entrepreneur, Ji Qi, seven years ago.

QUEST: Right. Here's one of your rooms. Let's have a look.

JI QI, HANTING INNS: Yes.

QUEST (voice-over): Ji Qi expects Hanting to be the world's biggest hotel chain by the end of the next decade. He took his inspiration from western low-cost brands, Accor, Ibis, Premier Inn and the like. Those that cater to the frequent business traveler on a budget.

QUEST: You get all of this?

JI: Yes.

QUEST: And a toothbrush?

JI: Yes.

QUEST: Really nice.

JI: Yes.

JI (through translator): I first got the idea from a book introducing Accor, about how they opened small hotels with less expensive but cozy, clean rooms. I realized there's a gap in the Chinese market for such hotels. So I decided to invest experimentally in that niche.

QUEST (voice-over): It worked. Hanting's growth rate is phenomenal. A new hotel is opened every two days.

QUEST: What is the time scale from decision to open, roughly?

JI: Roughly six months.

QUEST: You're at 1,000. What's your target?

JI: Ten thousand.

QUEST: OK. I want a room tonight. How much is it going to cost me?

QUEST (voice-over): With rooms at around $25 a night, it's a wonder how they turn a profit.

QUEST: How can you make money selling rooms at $25 a night?

JI (through translator): We only invest in crucial parts. In our lobby, you don't see fancy decorations, like marble surfaces. We keep everything simple because our clients don't really pay much attention to that. In that way, we manage to keep our hotels cost-effective.

QUEST: And how much does this room cost?

JI: Oh, maybe $60.

QUEST: Sixty dollars?

JI: Sixty dollars.

QUEST: It is only me, this is perfect.

JI: Perfect.

QUEST (voice-over): At $60 a night, it's hard to complain, and for the overseas brand, hard to compete.

JI (through translator): We are faster. We are more cost-effective. We know our clients better.

QUEST (voice-over): Knowing the Chinese guest is the key to success. The international market is of comparatively little interest.

QUEST: But why bother? You've got a billion people who have still got to stay in your hotels.

QUEST (voice-over): A billion people, whose income has quadrupled in the last 10 years. Small wonder that Hanting is staying at home.

(END VIDEO CLIP)

FOSTER: Well, just over China's northwestern border, another economy hoping to maximize its potential, all this week we have our eye on Kazakhstan, as our Fred Pleitgen explains, this country is rich in natural resources as it is in culture.

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FRED PLEITGEN, CNN CORRESPONDENT: Kazakhstan is among the world's top producers of many important minerals, including gold, iron and uranium, but it also has some of the largest proven oil reserves and the country is investing a lot to upgrade its hydrocarbon infrastructure.

FOSTER (voice-over): As Fred points out, the minerals, oil and gas won't last forever. See what the government plans next to ensure growth. It's a different view on the country, like looking into this mirror lake we've built.

We built it in the center of the capital of Astana. The artist lotion (ph) uses 2,500 mirrors covering 400 square meters and that is "Eye on Kazakhstan," coming up in just over an hour on "CONNECT THE WORLD."

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FOSTER: After the break, a disastrous drought that's ruining harvests in the U.S. We'll be bringing you that story next.

FOSTER: Now our country's in -- more than half the counties in more than half the states in the U.S. have been declared disaster areas after a drought caused by the recent heat wave. Many harvests have been ruined and the U.S. Agriculture Secretary has said the sheer amount of crops affected would make for a big economic impact.

(BEGIN VIDEO CLIP)

TOM VILSACK, U.S. SECRETARY OF AGRICULTURE: Seventy-eight percent of the corn crop is now in an area designated as drought impacted; 77 percent of the soybeans that are being grown in this country also impacted. It also obviously involves other commodities as well. Thirty-eight percent of our corn crop, as of today, is rated poor to very poor; 30 percent of our soybeans, poor to very poor.

And this obviously will have an impact on the yields. Right now we have indicated yields will be down about 20 bushels to the acre for corn and about three bushels to the acre for beans. That may be adjusted upward or downward as weather conditions dictate. This will result in significant increases in prices.

FOSTER (voice-over): Well, corn futures are already up 50 percent, and with corn being one of the main foodstuffs for livestock, that has a knock-on (ph) effect for meat prices, too. Analysts are predicting meat could cost as much as 10 percent more.

(END VIDEO CLIP)

FOSTER: Jenny Harrison has been monitoring that situation for us in the United States. She's at the International Weather Center, Jenny.

JENNY HARRISON, CNN METEOROLOGIST: Yes, Max, of course, this is an ongoing problem. It hasn't happened overnight. It's really because of the lack of rain, particularly through those spring months. In the last few hours, we have had a few showers.

There are some thunderstorm warnings, those yellow boxes there, but of course, the rain that's coming now is probably a little bit too little too late. Fifty-six percent of the entire United States is in some form of drought, be it moderate or, in some cases, extreme to exceptional.

This is the area we're talking about, 34 percent of the Midwest is in extreme drought, and it's happened really quite quickly. If you look at this back in March, you can see that throughout most of this particular region, there wasn't actually even a drought in place.

Then we move onto the 10th of July, and look how that situation has changed. All these areas in red showing where there's extreme drought. I mean, you just compare the two. As I say, that has happened in just a few months.

But the most significant months, because of course, that is when the crops need the water to actually grow, and obviously grow healthily. Now back on the 1st of July, you heard just in the report that the numbers are down beyond this.

But back in the beginning of July, 48 percent of the corn crop reported was good to excellent. Even then, it was the lowest percentage since 1988. But since then, and again these figures we've just been hearing, 38 percent to 39 percent of the U.S. corn is only good to excellent.

And of course the thing with this particular region is that it really relies on the rain. There is no irrigation, not for the most part. And when you compare the drought with Hurricane Katrina, these are three of the top most expensive weather-related disasters.

The current situation is being actually compared to this, number two, back in 1998, and that then cost $78 billion. Now this is the outlook as we go through towards the end of this month. The drought actually will probably get worse, not better. The temperatures also likely to well above average. So as you can imagine, that is why the situation is so very dire indeed.

There is more rain, more scattered showers across the Midwest, across the South as well. But as I say, that rain really was needed several weeks ago. Temperatures on the high side again, certainly on Thursday, 33 in Atlanta and up across the Midwest, we've got 32 Celsius in Chicago.

Now (inaudible) across into Europe, more rain across the north and the west. Not as much rain across France, bit of a break for you now for a couple of days. But you can see across the U.K., some very heavy downpours, some warnings across central regions. And then as we go through the next week, you can see that this is the actual sort of long-range forecast.

We're a little bit further ahead than we tend to go, wetter than normal for the north, but actually across the south, it looks to be near normal. That jet stream is pushing up towards the north. Cooler conditions really to the south and the north as well. And then a week beyond from the 25th of July to the 31st, we should actually have drier than normal conditions.

The reason that is so good is, A, we've had so much rain; we really could do without any more, but also, of course, this is the week in the lead up to the start of the Olympics. Temperatures, however, that same week, they might be a little bit cooler. But I'm sure you'd rather have that than more of the rain. So in the short term, we've got more rain pushing across the north.

We've got some very strong thunderstorms likely across those central areas. And there are some warnings in place for large hail, maybe even some isolated tornadoes. And then very quickly, we'll get to this one, Max, (inaudible), it is the Open starting on Thursday. Guess what? A few more showers in the forecast. Hopefully, though, only in the morning, Max.

FOSTER: Couldn't make it up, could you, Jenny? Thank you very much indeed. We'll have the later temperature of the markets, financial markets for you after the break.

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FOSTER: Welcome back. Just a check on the big board for you. We're out an hour's worth of trading to go. It was up more than it currently is up, about two-thirds of 1 percent at 12,883. Holding on to its gains, to some extent, despite that mediocre picture from the Fed's Beige Book, which we got about an hour ago.

That said, the unemployment or employment was growing at a tepid pace in most U.S. districts, even still the major U.S. indices look to be heading for a positive finish, as you can see that. A strong day in Europe, too.

Each of the big four closed with gains of 1 percent or more. Investors are still looking for safe havens. For the first time in history, the yield on two-year German bonds went negative. That means you pay for the privilege of lending your money to Germany. This is investors looking for anything safe. They just don't want to lose their money, even if they have to pay for it. It's all about safe havens.

Those numbers came despite a troubling report. We'll come back to that a bit later on, actually. We're going to have the headlines for you next. Thank you for watching. That was QUEST MEANS BUSINESS.

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FOSTER: These are the headlines this hour. Government helicopters have reportedly fired on Damascus, following an attack, regime attack earlier today.

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FOSTER (voice-over): Syrian state TV says four members of President Bashar al-Assad inner circle were killed, including the president's brother-in-law, the defense minister, the interior minister and the president's security adviser.

Jordan's King Abdullah has called the attacks a tremendous blow to the Assad regime. The White House says the only proof they need for united action on Syria. The statement follows sanctions against Syrian officials and companies by the Treasury Department.

Bulgarian officials say six people have been killed in a bus explosion outside an airport on the Black Sea coast. It was carrying tourists who had just arrived from Tel Aviv. Israel's prime minister says it was clearly a terrorist attack, with all signs pointing to Iran.

Twenty-four NATO supply trucks have been destroyed in a pre-dawn bomb attack. It happened before dawn in northern Afghanistan. Officials tell us the trucks were sitting in a parking lot, loaded with fuel and supplies, when an explosive device attached to one of them went off. The Taliban claimed responsibility by email.

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FOSTER: That's a look at some of the stories we're watching for you here on CNN. "AMANPOUR" is next, live from Jerusalem.